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cpacand
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Joined: 21 Dec 2009
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| Posted: 30 Dec 2009 at 00:23 | IP Logged
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Question:
Mitch, who is single and has no dependents, had AGI of $100,000 in 20X0. His potential itemized deductions were as follows:
Medical expenses
(before percentage limitation)$15,000
State income taxes$ 3,000
Real estate taxes$ 7,000
Mortgage (qualified housing
and residence) interest$ 9,000
Cash contributions to various
charities$ 4,000
Unreimbursed employee expenses
(before percentage limitation)$ 4,300
What is the amount of Mitch's AMT adjustment for itemized deductions for 20X0?
Solution-----Regular--------A.M.T.--------AMT Adjustment
Medical-----$7,500(7.5%)----$5,000(10%)----$2,500
State taxes---$3,000-----------0-----------$3,000
R.E. taxes----$7,000-----------0-----------$7,000
Home mortgage-$9,000--------$9,000-----------0
Charity-------$4,000--------$4,000-----------0
Misc.---------$2,300----------0------------$2,300
Total diff.--------------------------------$14,800
My doubt is why they are taking $2300 as misc. instead of $4300?
Could somebody please help me?
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cpacandidate
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cpa0123
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| Posted: 30 Dec 2009 at 00:30 | IP Logged
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Hi cpacand,
It is because of 2% AGI limitation. 2% of AGI is $2,000. Only excess is allowed as Itemized deduction
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amndchr2
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| Posted: 30 Dec 2009 at 10:12 | IP Logged
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I understand the 2% floor of the AGI but where does the addtional $300.00 come from?? Thanks for the help :)
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cpa0123
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| Posted: 30 Dec 2009 at 10:54 | IP Logged
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It is like this -
Gross amount = 4,300
2% AGI = (2,000)
Allowed deduction = 2,300
It is the 'excess' that is allowed 'after' 2% of AGI. I know it is confusing :)
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amndchr2
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| Posted: 30 Dec 2009 at 11:16 | IP Logged
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Wow!! That makes sense...Thanks :)
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Topic: A.M.T Itemized deductions
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